'This is not a standard situation:' Read the emails between Rio Tinto executives that sparked a corruption investigation

Iron ore mine.
Reuters
LONDON - The UK's Serious Fraud Office and the Australian Federal Police opened a corruption investigation into a multimillion dollar payment made by mining giant Rio Tinto to a private consultant.

The investigations follow the company voluntarily alerting the SFO, AFP and US Department of Justice to a payment of $10.5 million to François Polge de Combret, for his work on the Simandou project, a mining region in Guinea.

"The SFO is investigating suspected corruption in relation to the conduct of business in the Republic of Guinea by the Rio Tinto group, its employees and other associated with it," the SFO said in a statement.

A spokesperson for Rio Tinto said "it will fully co-operate with the Serious Fraud Office and any other relevant authorities, as it has done since it self-reported in November 2016."

Fueling the investigation is a series of leaked internal Rio Tinto emails from May 2011, which were written soon after the company had been granted permission to mine in the region. The leak, from 2016, shows top executives discussing the multimillion dollar fee, and how important de Combret — a former Lazard investment banker with close ties to the President of Guinea — had been in securing the deal in Simandou.

"Closeness to the President"

On the 10th May 2011, Alan Davies, the then head of energy and minerals and senior executive in charge of the project, emailed Sam Walsh, the then the head of iron ore. He said de Combret had requested $10.5 million for "services on securing [Simandou blocks] three and four," although did not explain the exact nature of these services.

The fee, he said, is "clearly stated as his bottom line, and a reduction from his request of $15 million."

Davies acknowledged this was "a lot of money," but said the "result we achieved was significantly improved by François' contribution and his very unique and unreplaceable services and closeness to the President." François, said Davies, had "vouched for our integrity when it was needed and helped bring us together when things were looking extremely difficult."

François, Davies said, had "helped me on a number of communication issues with the President and the Minister of Mines." The consultant was "extremely valuable insurance that things do go smoothly as we bed down the arrangements".

Davies also said he was "extremely worried" about the prospect of losing the "direct connection to the President," and moving forward, said he was "extremely pessimistic" about the chances of securing "a useful position in relation to [Simandou blocks] one and two" without François' "invaluable" services.

"This is not a standard situation," he said, and asked Walsh to approve the $10.5 million fee.

"Sizeable risk"

In another email sent to CEO Tom Albanese, entitled "Confidential: François de Combret," Walsh said Davies had "attempted to settle with Françoisat $7.5 million, but he is holding out for $10.5 million."

There is "no question," he said, that François "delivered sizeable value," but he noted there was "also no question that there is still sizeable risk going forward."

Walsh then suggested that the $10.5 million be put aside for François, but that this payment be contingent "on the first shipment."

Davies and another top executive, Debra Valentine, were fired last year for their dealings with François. A statement from Rio Tinto said they had "failed to maintain the standards expected of them under our global code of conduct." Meanwhile, Walsh had his bonus suspended in March, pending the investigation's results. Depending on what the authorities turn up, the company could also face heavy fines.

In 2014, US authorities jailed a representative of another mining company, BSG Resources, for accepting bribery in the region.